It’s a system (sigh) built on getting people to buy things they can’t reasonably afford through the veil of “it’s only X a month.” Unnecessary consumer debt sets people up to fail by putting them on a treadmill of excess consumption they believe is under control.
Sticker shock is a good thing. If you see the price tag of something and it has your head reeling, there’s probably a good reason you shouldn’t be buying it.
I’ve had a friend say they “made payments on” $280 jeans because they couldn’t stomach the full price at once. If I were to ask that same friend if they’d take out a loan to buy clothes, they’d likely would have told me no.
That’s the thing; people need to realize that BNPL is just a loan. You’re taking on debt to make those payments.
I came from a very humble family. We were mostly single income and stretched it tight. My parents never had savings, never invested, just spent what they made.
At one point, my dad got a new job and all of a sudden they were doing “well”. My parents decided they had a little bit of money to spend, overleveraged because everything was “just a monthly payment”, then lost everything. The house, the cars, the toys, everything.
I was in sixth grade when someone came to repossess our family vehicle at 2:00 AM.
A year later we had to give our two dogs to the shelter because we had to move to a place we couldn’t take them.
After that, my mom subleased rooms in the houses we rented so she could make rent.
All because of unnecessary debt, unreasonable spending habits, and not building a safety net.
That brings me to my next point. There’s a huge caveat here - the BNPL model is beneficial for those who must make emergency purchases for necessities, provided they can get a low / 0% rate. Even then, if people have to finance groceries, diapers, other health/medical supplies, something else is drastically wrong here (with the economy, not with the family).
BNPL founders didn’t have the struggling family in mind when they started these companies.
Buy now, pay later is a market that thrives on greed, FOMO, and selling people stuff they don’t need so they can look cooler to people they don’t like on apps that makes them unhappy.
The part that angers me most about BNPL is the facade they’re helping the world by making capital available to people in need. If they were truly looking to help people and not profit off of other’s fiscal trouble, these companies would not be profitable (see Klarna who losses quadrupled to $730 million in 2021) and they’d be doomed to fail.
These companies aren’t looking out for you. The next time you’re considering financing a new laptop or a pair of shoes, think hard about the hole you’re digging yourself into. American debt continues to climb, don’t become a victim to it.